First-time buyers (FTBs) who have dreamt of nothing other than having keys to their own place and transforming a property with new doors, double-glazing, and a modern kitchen may be closer to fulfilling their ambitions.
That is because Skipton Building Society, together with Skipton Intermediaries, has announced the removal of the maximum loan limit for property purchases.
Previously, buyers could only borrow £500,000 for their new home; however, Rightmove’s London Sales Data recently revealed the average price of a flat in London was £545,000 in 2015.
This cap would therefore mean prospective homeowners would need at least £45,000 in deposit to borrow the maximum amount for a typical London apartment.
Kris Brewster, head of products at Skipton, stated: “People who have good jobs, earning very healthy salaries, and have saved up large deposits, are still being priced out of the south and London markets.”
With monthly rents in the capital costing an average of £1,500 per month, it has become incredibly hard for those living in London to save up enough money to get on the property ladder, let alone saving for new home improvements – such as conservatories in Manchester or London – when they eventually move in.
Indeed, according to the House Price Inflation, property prices rose by 53 per cent between 2011 and 2015. This is significantly more than the 20 per cent increase across the UK during the same period.
With buying and renting costing so much, it is hardly surprising many FTBs turn to the ‘bank of mum and dad’ to help them get on the property market.
Indeed, the latest research by Legal & General and CEBR found this ‘lender’ will be responsible for as much as £5 billion in 2016, helping to provide deposits for more than 300,000 mortgages this year.